Indian bond yields ease towards 8-mth lows

Indian bond yields ease towards 8-mth lows

Mumbai: Indian federal bond yields eased towards eight-month lows on Thursday as expectations grew that the central bank would announce more liquidity-boosting measures at a policy review.

At 9:20am, the 10-year bond yield was at 7.58%, 2 basis points below Wednesday’s close. The yield hit an eight-month low of 7.49% during trade on Tuesday.

Total volume was a thin $75 million on the central bank’s electronic trading platform.

“There is hope the central bank may resort to further liquidity-boosting measures via cuts in banks’ cash and bond reserve requirements," said a senior dealer at a state-run bank.

The Reserve Bank of India (RBI) on Monday cut its repo rate, the rate at which it lends funds to banks, by one percentage point to 8.0%.

India’s annual inflation rate is forecast to have eased to 11.35% in the 12 months to 11 October, from 11.44% a week earlier, a Reuters poll of analysts showed.

In early August, inflation was 12.91%, the highest reading since annual numbers in the current data series became available in April 1995.

Lower global oil prices calmed inflation worries and encouraged investors to build positions in bonds. Oil hit its lowest level since June 2007 on Wednesday.